Gold Fundamentals 2

Gold belongs in every investor's portfolio. It is totally unique among financial
assets, a physical metal commanding timeless and universal intrinsic value.
It is a rock of stability in a chaotic world, a stark contrast to the complex
web of mere promises to pay that is our modern faith-based financial system.
Without gold, true diversification and protection from systemic risk is impossible.

Gold's fundamentals are dazzlingly bullish. Like everything else on the planet
that is freely bought and sold, gold's price today and in the future is a direct
function of its supply and demand. As long as its global demand exceeds its
global supply on balance, gold's price will continue powering higher in its
secular bull. While it has already come far from its humble beginnings in the
$250s in April 2001, it has a long way to run yet.

When I first started recommending physical gold coins to our subscribers in
May 2001 in the $260s, gold was widely derided as an anachronistic relic. Not
surprisingly after nearly quadrupling in the years since, it has earned
vastly more respect today. Still, most mainstream investors have yet to understand
gold's bullish fundamentals so unfortunately they are missing out on the vast
opportunities to come.

It is for these gold neophytes I am penning this essay. I will explore gold's
key fundamental drivers, both from the supply and demand sides. After you digest
this high-level overview of gold's fundamentals, you'll have a much better
idea of whether you should add some gold to your own investment portfolio.
In order to streamline the enormous body of research underlying this effort,
I've divided this essay into sections.

Supply - Mined Supply. Ultimately all gold is painstakingly chiseled
from the bowels of the earth. But even with the best modern mining technology,
this rare metal is still exceedingly hard to produce. Today's gold miners face
nearly insurmountable challenges on
a myriad of fronts. It is really a wonder that any gold is produced at all
when you consider just how difficult it is to bring new supplies to market.

First explorers have to find gold deposits. This isn't easy. Not only
is gold very scarce in the natural world, but prospectors have been scouring
the planet for millennia looking for it. Most of the low-hanging-fruit gold
deposits have probably already been found. It costs millions to explore, with
very high odds of failure. And if a promising ore target is found, tens of
millions more must be spent to drill and sample it to determine if it is economically
viable. This risky exploration and proofing process takes years.

And once a deposit looks economically viable, the real fun begins. Miners
must spend years more developing a mining plan and having it approved by various
government authorities. At any stage in this long arduous journey, the government
can torpedo the whole project resulting in a total loss. Unlike most businesses,
mines cannot be moved when problems arise. So gold miners are totally at the
mercy of corrupt bureaucrats. Extortion is common and even outright nationalization
is a very real threat in many parts of the world. Radical fringe environmentalists
constantly try to derail mining projects too.

After the government permits are obtained, construction must begin. This costs
hundreds of millions, sometimes well over a billion, in today's environment.
Since gold mining is so risky the banks are often unwilling to loan money to
miners, and if they do they demand onerous terms. So the companies have to
issue shares in the equity markets to finance these projects. While financing
was already difficult to obtain before the credit crisis and stock panic, many
miners today are finding it impossible to come by now. Without financing, mines
cannot be built.

Even if a miner somehow overcomes the long odds and brings its mine into production,
often a decade after the deposit was first found, more challenges await. Even
with extensive drilling before mining, the geology of the ore can vary dramatically
from plan. This results in lower production, higher costs, and lower profits.
Since gold is often only found in hostile climates today, bad weather can interfere
with production in a variety of ways. Friendly governments can be usurped by
unfriendly ones, raising the risks of crushing taxes or even confiscation.

For these reasons and many more, global gold production is actually falling despite
the relatively high gold prices. Annual gold mined today, which is 70% of the
world's supply, is running over 4% lower than when this bull began in
2001! Global reserves are also shrinking, despite vast sums being spent on
exploration. My business partner Scott Wright recently wrote an excellent essay,
with charts, on worldwide gold
production and reserves if you want to dig deeper. Despite this powerful
gold bull, miners are falling farther behind.

With mined gold supply heavily constrained despite the best efforts of the
world's elite miners and the strong gold-price incentives to produce, any demand
growth cannot be satiated with mined gold. And even if gold mining somehow
becomes easier (geopolitics are less hostile, for example), it will still take
the better part of a decade before new supplies can be brought online.
This is incredibly bullish for gold!

Supply - Central Bank Sales. Over centuries, central banks have accumulated
vast hoards of gold bullion. Some of this was purchased righteously, but much
was obtained via plunder and confiscation.
Central banks as a group are the largest participants in the gold market. Thus
they have become something of a bogeyman in the gold world. Many investors
live in constant fear of future central-bank gold sales.

Seven years ago when gold was under $300 central banks made me anxious too.
But they don't any longer. Despite the mystical aura of dread surrounding them,
they are merely gold investors like me. While their collective scale is very
large, these behemoths are run by mere mortals who cannot see the future either.
Whether buying or selling gold, central banks operate within the same market
constraints as the rest of us.

In the entire history of the world, analysts estimate that about 162,500 metric
tons of gold have been mined. Incidentally gold is so dense that a metric ton
of it will fit in a solid cube less than 15 inches square. Thus all the gold
ever mined anywhere would fit in a cube less than 67 feet per side! Of this
global above-ground gold supply, as of Q3 2008 the world's central banks held
29,784t. Thus the CBs control just 18% of the world's total above-ground gold.
Investors control a far-greater 82%.

Since this gold bull began in 2001, mined production has averaged about 2,500t
per year. So if the world's central banks decided to sell all their gold today,
it would be like 12 years of production hitting the markets all at once. The
gold price would utterly crash in such a scenario, it would be apocalyptic.
Thankfully it will never happen for a wide array of reasons. First, 107 sovereign
countries own this gold and they are never all going to agree on anything,
let alone a coordinated gold dump.

Of this 29,784t of official gold holdings, 8,134t (27%) belongs to the United
States. Many gold conspiracy theorists believe a big fraction of this gold
has already been stealthily sold into the marketplace. This is very
bullish if true since it reduces the threat of future sales. Even if the US
still holds this gold though, the US dollar would probably collapse if an announcement
was made that the US was dumping its gold reserves. It is extremely unlikely.
10,911t (37%) of this CB gold is held in the Eurozone, and this gold is a very
high percentage of these countries' total foreign-exchange reserves (58% in
aggregate).

So European CBs have been selling gold aggressively to diversify since
at least 1999. That year they met and formed what was later called the Central
Bank Gold Agreement. They agreed to limit their collective gold sales to 400t
annually over 5 years. In March 2004 in CBGA 2, this agreement was extended
and expanded to a 500t-per-year maximum for another 5 years. While these targets
haven't always been hit in a given CBGA year (ending September), they are a
good proxy for European CB sales as a whole.

Since 2000, European CBs alone have sold between 400t to 500t of gold annually.
These are indeed big numbers, adding 16% to 20% to the global mined supply.
Without these sales, gold's price would have gone much higher. But even with
them, gold has still nearly quadrupled since early 2001! This means
even heavy sustained CB selling is not big enough to offset the growing investment
demand for gold. So far in this secular gold bull, despite the CBs' giant selling
campaigns, gold has still powered higher.

Central banks are not an apocalyptic threat for gold. Every year European
CBs sell gold, which makes their "market share" of total above-ground gold
dwindle. And every year more gold is mined, farther reducing CBs' relative
footprint in the gold world. Thus with each passing year, with every tonne
of CB gold sold, central-bank impact and relevance in the gold market gradually
fades. They are nowhere near as big of threat today as they were in 2001 and
with each passing year their positions continue to weaken.

And not all central banks are sellers. 10,739t (36%) of CB gold is held outside
of the US and Europe. These Asian central banks will probably increasingly buy physical
gold bullion. While western CBs' gold holdings generally represent 50% to 75%
of each country's total forex reserves, in Asia gold is just a few percent.
Japan's 765t of gold are just 2.1% of its forex reserves. China's 600t are
merely 0.9%. Russia's 473t are only 2.1%. And India's 358t account for a paltry
3.1%. These growing Asian giants need to diversify into gold, not out
of it like the Western CBs. They will add to overall global investment
demand.

The International Monetary Fund holds 3,217t (11% of official gold). Potential
IMF gold sales are a perennial threat trotted out every few years to scare
gold investors. Even back in 2001 IMF sales were discussed often, yet big IMF
selling has still not come to pass in the 7 years since. Even if the IMF can
get permission from its 185 member countries to sell gold, which is very unlikely
for political reasons, the IMF gold cannot stop this secular gold bull. Bring
it on, the Asian CBs would love to own the IMF gold.

At any rate, the key thing to remember about central-bank gold sales is they
have been large and constant since gold was in the $250s. Yet even with this
supply headwind, gold still nearly quadrupled to just over $1000 by early 2008!
Even the worst that central banks could throw at gold wasn't enough to seriously
retard its secular bull. And with each tonne they sell, their relative share
of above-ground gold (along with their relevance) dwindles. CB gold is finite.
It is central banks that are the anachronism, not gold.

Demand - Investment Demand. With mined supply shrinking and central
bank hoards dwindling, gold supplies are very constrained. And no matter how
high the gold price goes, mining is not going to get much easier and in fact
will probably continue to get more difficult. And central banks are not going
to be able to conjure up more gold out of thin air like they do with their
fiat paper currencies. With flat-to-shrinking supplies, demand is the wildcard
that will drive gold prices in the coming decade.

Unlike all other commodities which are primarily used for industrial purposes,
almost all gold demand is investment-driven. Gold's intrinsic value has persisted
for millennia, outliving every government, currency, and nation the world has
ever seen. Gold is not a faith-based promise to pay like every other financial
asset. Its innate value makes it easily negotiable, for anything anywhere,
no matter what happens. Physical gold bullion should be the foundation of every investor's
portfolio.

All the demand categories below are subcategories of investment demand. For
a broad array of reasons today, all kinds of investors all over the world are
increasingly interested in gold investing. And in the financial world, the
higher the price of anything goes the more people become interested in it.
Performance and returns attract in capital, which creates a virtuous circle
driving even higher prices. So a secular gold bull gradually becomes a self-fulfilling
prophecy until supply once again eclipses demand.

Demand - Monetary Inflation. Inflation is always and exclusively purely
monetary in nature. When central banks create fiat money out of thin
air, it eventually filters into the real economy to compete for finite goods
and services. Relatively more money bidding on relatively less goods and
services means higher general prices. Inflation is devastating for investors,
an immoral stealth tax levied by corrupt governments. Gold is the only financial
asset that thrives in inflationary times.

And boy are we seeing inflation today! The socialistic financial-market bailouts,
which now exceed $8 trillion in the US alone according to Bloomberg,
are the biggest single inflationary event the world has ever witnessed. During
the Great Stock
Panic of 2008, within a matter of months Washington and the Fed inflated,
spent, or guaranteed the equivalent of 55% of the entire GDP (all goods and
services produced annually) in the whole United States of America!

This near-hyper inflation alone is exceedingly bullish for gold. But unfortunately
central banks relentlessly inflating their money supplies is not an isolated
event reserved for crises. They are always doing it! Since January 1980,
the US Federal Reserve has grown MZM money by an astounding 10.4x! There are an
order of magnitude more dollars floating around the world today than 3
decades ago. This equates to an 8.7% compound annual growth rate over 28 years.

This wouldn't be a big deal if the underlying economy grew by 8.7% a year
as well. If the pool of goods and services on which to spend money grows as
fast as the money supply, there is no inflation. But obviously this is not
the case. Since January 1980 US nominal GDP has only grown by 5.3x, only about half
as much as the money supply. And the Fed is not alone here, all over the
world broad money supplies in first-world nations generally average growth
rates of around 7% annually.

At 7% annual growth rates globally, there is 6.6x more paper money in circulation
today than there was in early 1980 at the top of the last secular gold bull.
Yet over centuries, new mining has only added 1% to 2% to the aboveground gold
supply annually. At 1.5% gold growth through mining each year, today's gold
supply is only 1.5x as big as 3 decades ago compared to 6.6x for money. Divide
this out and there are 4.4x as many fiat-currency units (dollars, euros, everything)
potentially chasing each ounce of gold today than at the end of the last gold
bull!

If you multiply the famous $850 nominal high of January 1980 by this 4.4x
outpacing of gold growth by monetary inflation, it yields a conservative end-of-bull
target approaching $4000 per ounce. If you adjust by the lowballed Consumer
Price Index instead, the real
gold high in January 1980 in today's dollars ran up around $2400. Either
way, today's gold bull has a long way to run before it reflects today's inflation,
let alone future inflation. Central banks' only real ability is to inflate,
inflate, inflate into infinity.

So monetary inflation is not going away. If anything it will only accelerate.
In a fragile debt-based highly-leveraged global financial system, inflate or
die is a literal truth. If central banks don't keep inflating at ever-expanding
rates, the whole worldwide system will implode. This perpetual accelerating
fiat-paper inflation is unbelievably bullish for gold. As investors worldwide
become more aware of the incredible monetary inflation around them, their appetite
for gold investment will only grow.

Demand - Negative Real Interest Rates. When central banks are running
their printing presses overtime and inflating like mad, nominal interest rates
(yields on bonds) can slide below the rate of inflation. When this happens
real inflation-adjusted interest rates go negative. In other words, merely
by owning the best elite bonds like US Treasuries bond investors actually lose real
purchasing power year after year! Naturally bond investors aren't in the game
to lose money, so negative real rates infuriate them.

Unfortunately just like the old Soviet Politburo, today's central banks actively
manipulate short-term interest rates. As we've seen in recent months, central
banks can drive nominal interest rates down to zero if they desire. This abominable
power is unbelievably destructive to free markets. It destroys the necessary
natural balance between savers (investors) and debtors. And when capital transactions
are no longer mutually beneficial to both parties, investors gradually start
to walk away.

Thus negative real rates slowly strangle the life out of the bond markets.
Bond investors, tired of being punished by the central banks for their act
of saving and forced to subsidize debtors, gradually withdraw their capital.
It is foolish to invest in a realm where you are guaranteed to lose real purchasing
power for investing your scarce capital. Some fraction of this bond flight
capital seeks refuge in gold. While gold doesn't pay a yield, over millennia
it has never failed to at very least keep pace with monetary inflation and
preserve purchasing power.

And in today's crazy environment of near-zero nominal yields on even US Treasury
debt, mainstream bond investors' traditional argument against gold is rendered
moot. In normal times of positive real rates, the way the markets would always
work without central-bank interference, bond investors object to gold because
it pays no yield. Well, today bonds pay virtually no nominal yields either!
And after inflation their real yields are terribly negative. This makes gold
very attractive to mainstream debt investors.

Thus negative real rates, inflation exceeding nominal bond yields, is the
most bullish possible monetary environment for gold. A couple weeks ago I wrote
an essay on real
rates and gold that includes long-term charts if you want to dig deeper
into this crucial truth. Until the goofy Fed raises interest rates radically,
say to 6%+, real rates will remain too low or negative and very bullish for
gold. And as you know, there isn't a snowball's chance in hell that the cowardly
Fed will push rates to 6%+ for many years to come, if ever.

Demand - Secular Dollar Bear. The central banks' artificially-low interest-rate
policies to subsidize debtors and punish savers wreak terrible collateral damage
on currencies. The global currency markets are often driven by yield. If one
first-world country's bonds are yielding 2% while another's are yielding 4%,
currency investors and speculators will naturally gravitate to the higher yields.
So today's ludicrously-low US interest rates are ravaging the already-weak
US dollar.

Once the world's reserve currency, the mighty US dollar has been in a secular
bear since mid-2001. As measured by the flagship US Dollar Index (a basket
of major currencies), the dollar carved a series of new all-time lows
in spring 2008. The long-term
dollar charts show just how weak this currency has been, down 41.0% at
worst in its secular bear to date. And this was all well before Ben Bernanke
panicked and forced US interest rates to all-time lows near zero!

Today's deeply negative real-rate environment will only strengthen and prolong
the secular dollar bear. As the long-term
USDX charts clearly reveal, the US dollar is always weak in a secular sense
when real rates are too low or negative. A weaker dollar drives all kinds of
investment interest in gold, from two major constituencies. Since gold is ultimately
another currency, the only hard one on the planet, futures traders buy gold
aggressively when the dollar sells off. A continuing dollar bear will drive
major futures buying in gold.

Even more importantly, large foreign investors including central banks have
far-too-much dollar exposure relative to their overall portfolios. This great
overallocation was fine when the US dollar was in a secular bull in the 1990s.
But these investors have already lost a fortune in the 2000s dollar bear and
they will lose a lot more if this bear continues and they don't diversify out
of their overweight dollar holdings. While they will buy a lot of euros with
their dollar sales, some major fraction will flow into gold.

The biggest buyers of gold to protect themselves from the ongoing dollar bear
will be the Asian central banks. As mentioned above, they now have trivial
fractions of their total forex reserves deployed in gold. Yet they have trillions
of dollars worth of exposure in US dollars and US Treasuries, from 50% to 80%
of their total reserves in falling US dollars! Asian CB diversification out
of dollars into gold is mind-blowingly bullish for this metal.

At $800 per ounce, the 2500t of new gold mined each year is only worth $64b.
If Asian central banks gradually move $1t (not even half of their US dollar
reserves today) into gold in the coming decade, it would represent buying equivalent
to almost 16 years of total world gold production! So the secular dollar
bear, exacerbated by the Fed's asinine 1970s-style negative-real-rate policy,
is highly likely to spawn big CB gold buying out of Asia for diversification
reasons. The ongoing dollar bear is very bullish for gold investment demand
growth.

Demand - Secular Stock Bear. Bond investors, futures traders, and Asian
central banks are not the only giant pools of capital that have huge incentives
to invest heavily in gold today. So do stock investors. As I started warning
about back in 2001, after
the giant secular bull that peaked in early 2000 the US stock markets were
due for a 17-year secular bear. This means 17 years of grinding sideways on
balance, never heading too far above the 2000 highs over this entire multi-decade
span.

These secular bears that occur after secular bulls are part of a great valuation-driven
cycle in the stock markets that I call the Long Valuation Waves. The LVWs are
the single most important force for long-term stock investors to understand,
so please read my
essay on them if you are not familiar. Since 2001 this analysis has proved
dead right, even though most investors and analysts scoffed at it. I even used
LVWs to warn about the S&P 500 getting cut in half back in
January 2008 well before the recent stock panic.

Because we are indisputably in the secular-bear stage of our current LVW,
the stock markets are likely to grind sideways for another 8 years or so. The
last time a 17-year secular-bear hit the US stock markets, between 1966 and
1982, stock investors were flat on paper but they absorbed tremendous real
losses after inflation. Realize that big 100% cyclical
stock bulls are still possible and probable within these secular bears,
but when all is said and done stocks will have merely ground sideways for nearly
two decades.

As stock investors come to grip with this ugly reality, they will get more
and more discouraged about general stocks. Kind of like negative real rates'
impact on bond-investor psychology, stock investors are going to increasingly
realize how silly it is to stay heavily deployed in flat-trending stocks and
suffer heavy real losses. Some fraction of these beleaguered stock investors
will turn to gold for deliverance.

Between March 2000 and November 2008, the flagship S&P 500 US stock index
lost a sickening 50.7%. Yet over this same span to the very day, gold soared
161.0% higher! Wouldn't you have much rather been in gold since then, like
we contrarians have? And if you instead optimize this span for the secular
gold bull rather than the secular stock bear, it looks even better. From April
2001 to March 2008, gold soared 291.7% higher. Over this identical 7-year span
the SPX was merely up 11.4%.

As mainstream stock investors start to better understand gold's fundamentals,
more and more of their massive pool of capital is going to flood into gold.
Indeed this is already happening through the new gold ETFs. These exchange-traded
funds act as a conduit between stock-market capital and the physical gold market.
In fact, the GLD
gold ETF in the US (the world's largest by far) has grown its holdings
from nothing to 775t held in trust on behalf of US stock investors in just
4 years! This single ETF now holds more gold than all but 6 of the world's
biggest central banks!

Demand - Secular Commodities Bull. During the secular stock bull from
1982 to 2000, capital was increasingly seduced into the stock markets to chase
the phenomenal returns. This led other sectors to be starved for investment,
particularly commodities. Thus global commodities-producing infrastructure
was largely left rusting for the better part of two decades even while worldwide
economic activity ramped up dramatically. This chronic underinvestment in supply
and delivery infrastructure led to this decade's great
commodities bull.

Despite the brutally fast and large correction in commodities since July that
was greatly exacerbated by the stock panic, these secular commodities bulls
aren't over. They tend to run 17 years on balance in history, with inverse
phases to the stock LVWs. When stock markets are in secular bulls, commodities
are in secular bears. And when stocks are in secular bears like today, commodities
are in secular bulls.

Secular bull markets can't end until global supply growth exceeds global demand
growth. This has yet to happen in nearly all major commodities. No matter how
high prices go, as gold mined production illustrates, commodities producers
just can't adjust fast enough to meet demand trends. It takes years to over
a decade to find new supplies of raw materials and bring them to market. This
inherent inelasticity of commodities supplies is what makes commodities bull
markets so exciting and exceedingly profitable.

On top of today's demand, half the world (primarily Asia and Africa) is now
industrializing. Billions of people are working incredibly hard to increase
the standards of living for their families. And as standards of living rise,
absolute commodities consumption will skyrocket. Sure, the average Chinese
or Indian is never likely to consume as much per-capita as we Americans are
blessed to do today. But since they are starting from such low levels, and
since there are billions of Asians, even if they ultimately get to 1/5th the
per-capita levels of US consumption of major commodities then aggregate global
demand will explode.

As this commodities bull powers higher worldwide, gold will get increasing
attention from investors. While gold is not the king of commodities like oil,
gold is the easiest and most logical way to invest in commodities. It is easily
bought and sold, extremely valuable for its volume and weight, completely portable,
and very easy to store. So as the global commodities bull reemerges from this
severe correction and powers higher, untold hundreds of millions of investors
worldwide will start adding gold to their portfolios.

Demand - Rise of the Asian Consumer. We've already discussed Asian
central banks needing to diversify their dollar-dominated forex reserves into
gold. But another huge source of future investment demand is going to be from
average Asian consumers. Unlike Americans and increasingly Europeans, Asians
have a deep cultural affinity for gold. They have always respected it and want
to own it even when it is not performing well. They understand from painful
historical experience how physical gold protects them from corrupt governments,
paper currencies, and unforeseen financial disruptions.

As the industrialization of Asia (and Africa) makes consumers more affluent,
they will demand much more gold investment. Asians tend to be big savers (investors)
even in lean times, and as their incomes grow they will have larger surpluses
available to invest after living expenses. There is no doubt a big fraction
of these surpluses will buy gold. While each Asian won't be able to afford
much by Western investors' standards, with billions of them the aggregate increase
in gold demand will still be stunning.

And Asian stock markets weren't immune to the recent stock panic. In fact,
they fell more violently than the US markets in many cases. Gold denominated
in other currencies did far better in the global stock panic than it did denominated
in US dollars, approaching all-time highs in some cases. So the new Asian investing
class, terribly shaken by the stock-market carnage, is now more likely than
ever to diversify some of its capital into gold.

Over the coming decade, the rise of the Asian consumer/investor could be more
bullish for gold investment demand than all the other demand factors combined.
Asian investment demand barely existed during the 1970s gold bull, yet that
bull was still huge. Imagine how big today's will ultimately prove with Asia
finally on board.

Suppy and Demand - Technical Proof. There are many other secondary
factors likely to increase global gold investment demand. The Information Age
is an example. During the 1970s gold bull, Wall Street hated gold just like
it does today. So back then many investors couldn't learn about gold because
the mainstream media monopolized information flow. Lack of widely-available
good analysis on gold retarded that famous gold bull, which was still very large
(+2,332%!).

But thanks to the Internet, the mainstream media's stranglehold on information
has been shattered. Today anyone anywhere can easily learn about gold fundamentals.
This is very bullish for gold. Thanks to the Internet, today any investor can
order physical gold coins in a matter of minutes that will be delivered to
his doorstep a few days later. Thanks to computers, today stock investors who
wouldn't bother with gold coins in a million years can buy a gold ETF in seconds
to add gold exposure to their portfolios. We live in a wondrous era!

Ultimately though, the proof of this gold bull is in its secular chart. The
path gold has carved here is the aggregate result of every ounce of gold bought
or sold on this planet since 2001. Every central bank sale is reflected here.
Every gold investment made by individuals and institutions is reflected here.
Every sale of gold, whether to fund a kid's college education, buy a house,
or whatever, is reflected here. This chart is the distillation of all global
supply and demand for gold. And its message is crystal clear.

Since early 2001, gold has nearly quadrupled at best. It has relentlessly
carved higher highs and higher lows on a secular basis. Its dollar price has
increased every single year (the green numbers on the bottom show the amounts).
The only way such results are possible is if global demand growth has indeed
exceeded supply growth since 2001. I challenge you to find another investment
that can even approach such performance in the incredibly chaotic markets we've
witnessed over the last 7 years. Gold is already in an elite class of its own.

At Zeal we've been long physical gold since it traded in the $260s in May
2001. Our subscribers have already made fortunes in the 7 years since heeding
our analysis and recommendations. So we are certainly not new to this gold
party, we were buying gold and gold stocks back in the early 2000s when it
was considered lunacy to do so. We are true contrarians who have been battle-tested,
and prevailed, in this challenging financial decade.

We are going to work hard to continue excelling in the next decade, capitalizing
on the ongoing gold and general-commodities secular bulls. We publish acclaimed weekly and monthly
newsletters that detail our market analysis on an ongoing basis and the
real-world trades we are making based on it. Subscribe
today!

We also just finished a deep new 36-page fundamental
report on our 12 favorite gold stocks, the result of hundreds of hours
of research looking at all the world's publicly-traded primary gold producers.
As gold powers higher, gold stocks should continue to leverage its gains. Buy
our new report now while these stocks remain at bargain panic-driven
prices!

The bottom line is gold's fundamentals are more bullish today than ever. Despite
relatively high prices, mined supply is shrinking. Central banks' relative
power in this market is waning dramatically. And thanks to both natural market
forces and artificial manipulation contrivances, global investment demand for
gold is likely to grow tremendously from today's levels. This secular gold
bull is far from over friends!

If you have questions I would be more than happy to address
them through my private consulting business. Please visit www.zealllc.com/financial.htm for
more information.

Thoughts, comments, flames, letter-bombs? Fire away at zelotes@zealllc.com.
Due to my staggering and perpetually increasing e-mail load, I regret that
I am not able to respond to comments personally. I WILL read all messages though,
and really appreciate your feedback!

Mr. Hamilton, a private investor and contrarian analyst,
publishes Zeal Intelligence, an in-depth monthly strategic and tactical analysis
of markets, geopolitics, economics, finance, and investing delivered from an
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